Chipmakers tank on oversupply fears as SK Hynix drops 14.6%, Samsung 9.1%; Micron down 10%+

Semiconductor stocks crashed globally on Thursday on growing concern that massive Big Tech investment in AI infrastructure will flood the market with excess compute capacity. South Korea's Kospi benchmark sank 7.9% to 7,648.09, its lowest level since June 8, dragged down by heavyweight chipmakers. Memory-chip giant SK Hynix lost 14.6%, Samsung Electronics tumbled 9.1%, and Japan's Kioxia fell 13%. In the US, Micron dropped more than 10% on Wednesday and fell another 2.3% in Thursday premarket. TSMC fell 1.6%, while Intel and AMD each shed around 9% in prior sessions.

The selloff reflects investor concern that the structural oversupply problem extends beyond near-term valuation resets. Analysts warned that while surging AI demand drove chip stocks up, massive capex by hyperscalers such as Meta, Google, and Microsoft—coupled with reports of Meta's plans to sell excess AI compute capacity—suggests that tokenization economics will deteriorate faster than expected. A June jobs report showing only 57,000 new US jobs, well below the 114,000 expected, added to economic uncertainty and rotated money out of growth sectors.

The market reversal underscores the fragility of the AI capex narrative. Even with H1 2026 venture funding at record $510 billion, investor sentiment has flipped from undersupply to oversupply risk. South Korea, Japan, and Taiwan—where Kospi, Nikkei, and Taiex had climbed 77%, 33%, and strong gains respectively year-to-date—bore the worst of the rotation. Capital Economics economists warned that while AI demand may continue, adoption barriers and delayed financial returns risk justifying the massive scale of investments already committed.